In spite of continued low interest rates, sales of fixed annuities are up. So, why aren’t you selling them?
Many agents and advisers don’t understand annuities and, therefore, fail to offer them for sale to their clients even though they may be licensed to do so.
That’s too bad because such agents are 1) not providing a valuable solution to a common consumer problem, and 2) leaving money on the table – your clients will buy them at their local bank, thrift-and-loan, or even through Walmart (MetLife is testing those waters at certain Walmart locations on the east coast).
Here’s the problem: consumers are fed up with Wall Street. Up until just a few months ago, mutual funds suffered one of the worst out-flows of money in recent history. So, where did that money go? Largely to bank CDs. Those CD returns are getting lower and lower. I just called a major bank (whose name you would know if you thought about a stage coach) and the same CD available two years ago at 2.15% is now crediting at 0.75%.
So, now consumers are fed up with the banks. Where, then, to put one’s money?
Here’s the solution: fixed annuities
A recent study done by major life insurance carrier found that among respondents age-55 to age-65
- 87% wanted “guaranteed principal”
- Roughly the same percent would rather have an “investment” of 4% “guaranteed” than a non-guaranteed investment currently advertised at 8% return without guarantees
Given the recent turn-around in the market, that was a surprise to those conducting the survey. This, it seems, clearly indicates that the Main Street is not ready to get back to Wall Street any time soon.
The survey also found that
- Women were more attracted to guaranteed financial growth than men, 91% to 82%
- Only 25% owned an annuity
- Withdrawal strategies (taking income for retirement living) are now as important as the return on their savings for retirement (about 50%-50%)
With regard to consumer knowledge about annuities
- 75% of respondents indicated a general lack of knowledge of them
- 37 % of that group said that they “had little knowledge” or “weren’t clear” about them
- 38% checked the box marked “Don’t have a clue”
So, what’s the take-away?
First, get current with your own knowledge about annuities (check out the resources for annuities on our website www.designsinlife.com). Then, just ask: “So, how do you feel about your retirement savings plan?” Or, “Would you be interested in an insured contract that provides an income you can’t outlive?”
Don’t miss the boat. The person who educates their account holders and clients about annuities is likely going to be the person that sells them to them. Is that going to be you…or someone else?